Claims: Frequently Asked Questions
How are doctors paid for medical services provided at a physician’s office?
How the physician gets paid depends on the kind of health insurance coverage you have. Here are a couple of the different insurance types with respective methods of payment.
If you have an HMO¹ insurance plan, regardless if it’s an individual/family health plan or through an employer sponsored group plan, you will probably be subject to relatively small co-pays. The doctor also gets paid a capitated fee²from the insurance company. A deductible and/or coinsurance will typically not apply to a doctor visit, but instead only for hospital admissions (check your policy for these specified details).
If you have a POS³ insurance plan, then you will also probably be subject to a co-payment every time you visit the doctor. But a POS differs from an HMO in a couple of ways. The one that is important to note here is that the provider gets paid directly from the insurance company every time provides medical services to the member (you) and the payment depends on exactly what medical services are being provided. The second thing to note about a POS with regards to payment is that any outpatient benefits are typically subject to your annual deductible – not just the office visit co-payment (you can find these details outlined in the schedule of benefits portion of your policy).
If you have a PPO⁴ you may or may not have a co-payment due at the time you visit your doctor or any medical provider. The provider will typically send the claim (the bill indicating all medical services performed) to the insurance company and will wait to receive payment from the insurance company directly. You, as the policyholder, will receive an EOB⁵ from the insurance carrier and then a bill from the doctor for your portion of the total bill if applicable. This depends on whether medical services were subject to a deductible, coinsurance, or an amount over the UCR (usual and customary fees).
1. Health Maintenance Organization (HMO): A managed care system in which involves a defined network of providers, physicians, hospitals, and other medical centers that a policyholder (you) can visit. In other words, you must stay within the “network” in order to be covered for any medical services. If you visited a provider that was not within this defined network, then you would most likely not be covered for any medical services performed (unless it was due to an emergency as defined in your contract terms).
2. Capitated Fee: The contracted dollar amount that the insurance company pays the medical provider per assigned HMO member. So, if you choose a primary care physician (HMOs usually require that you select a primary care physician who would be the primary doctor you would need to see before being referred to a specialist if necessary) that PCP will get paid X amount of dollars every year for whatever medical services they provide you with regardless whether you even go to them.
3. Point Of Service (POS): A managed care system that is best described as being in between a HMO and PPO system. The insurance company files with the respective states Office of Insurance Regulation as a HMO, but includes riders (additional legal papers and stipulations) that make it a POS. These riders usually state that a primary care physician is not required, and/or referrals to visit a specialist are not required, etc. These riders make a POS walk and talk like a PPO in a major way but without being one and ultimately the medical providers are paid per service instead of per member on an annual basis.
4. Preferred Provider Organization (PPO): Another form of a managed care system usually characterized by having a more robust network of providers that the insurance carrier has established contracted rates for medical services provided to policyholders. These contracted rates are meant to be much less than what the cost would be without insurance. You do not need a referral to visit a specialist, and although it is “preferable” to visit only medical providers in the PPO network, you may go to anyone you wish. BUT NOTE that the benefits are not at all the same as if you were to visit an “in-network” provider.
5. Explanation of Benefits (EOB): Although it may look like it, it is NOT a bill. Your insurance carrier sends you this illustration if you will, of what they were billed by your medical provider for services you had performed. This should include medical service provided, date of service, amount billed by the medical provider, the amount allowed by the insurance carrier, and finally what your total responsibility (any monies that you should expect to receive a bill for in the near future). Another important thing to note are the explanation codes found on these documents! For instance, at times they may include either a little number or a term that is better defined usually at the middle to lower part of the document. This can include an “EX” for instance indicating that the medical service provided is being EXCLUDED from coverage since it was due to a PREEXISTING CONDITION. There are appeals and such that can be done – but for now just know that EOBs are important to understand.
2. Why did the insurance company not cover my doctor visit and/or deny a claim?
Assuming that your claim or medical service was, in fact, not covered, then this could be for several reasons. But before listing possible reasons, I think it would be worthwhile to mention that at times you may receive a bill from a medical provider – but it is important to understand if it’s due to a deductible, coinsurance percentage, or the like that may, in fact, apply and that your health insurance policy should clearly state in the schedule of benefits section. I have found that often times my clients think that their insurance company did not cover something when in fact it was covered.
So, if your insurance company denied coverage for medical services performed it could be for one of the following reasons:
- Your policy may not cover those services as defined in the exclusions section of your policy (and I apologize if your health insurance agent did not explicitly define these exclusions to you). At East Coast Health Insurance the agents are trained to explain these fine print details to our clients – but too many times I have seen that either the policy is just bad and/or the agent was bad. Depending on what state you are in, you usually have a minimum amount of days 10-30 in which you can read your policy and decide to cancel for a full refund.
- Your policy may not exclude the medical service but instead have benefit limitations. For example, you may only have a $300 benefit for preventative care services, such as your annual physical or pap smear. Or your policy may limit the number of doctor visits you are allowed annually or quarterly. And yet another example that would be awful but does exist in some notorious health insurance policies is a benefit limit imposed for a condition or as an annual maximum benefit level. An example of this would be a $10,000 maximum benefit amount for any inpatient services – which at our health insurance agency we would define as a pretty mediocre policy and do not sell, but unfortunately have heard horror stories about.
- Your insurance carrier may impose a pre-existing condition clause that imposes a waiting period of about 12 month – 2 year time frame where no medical services provided for a pre-existing condition will be covered. So those costs will be completely out of pocket for you – your deductible would not apply but rather you would have to pay the entire price for that service out of pocket. Check out your specific state’s laws for further details.
- Your medical provider may have coded the procedure incorrectly! This is something that happens more often than I would like to see, but the GOOD NEWS is that it’s fixable.
An example of this would be if you went to your gynecologist for your annual pap smear and the provider submitted the claim (bill) to the insurance company with a code indicating that it wasn’t a check-up but a second pap smear to check an abnormal pap smear.
Another example would be if you went to have your routine annual physical done and while at the doctor you mentioned,”by the way doc, my foot was bothering me the other day,” which would be fine as long as the doctor submits the claim with the first and primary code being PHYSICAL not FOOT. If the provider submits the claim to the insurance company with some kind of service he performed on your foot listed as the first item instead of the physical, they may not cover that doctor’s office visit as a physical. The medical provider should note the physical first and then the foot exam or whatever it was as number 2 or 10 – anything but the 1st.
- Your insurance company may not have processed the claim correctly or not at all, which are my favorite situations since these can usually be fixed pretty quickly. It could be due to a pre-existing condition form that the insurance carrier had sent out for you to complete and upon receiving it back may not have processed the claim again, or it could be due to a technical or systems issue. Regardless of the exact reason, it is fixable.